NATURAL GAS – IS THE ENEMY OF AN ENEMY AN ALLY?

Natural Gas Hits a Roadblock in New Energy Bill
Clifford Krauss, September 7, 2009 (NY Times)

SUMMARY
Insiders report Representatives and Senators from coal-producing states are attempting to use the energy and climate legislation going through Congress this fall to marginalize natural gas in the U.S. energy mix.

The natural gas industry has organized, hired lobbyists and will fight back. (See NATURAL GAS, A BRIDGE NOT SO FAR)

It is possible there could be a potent political alliance between the natural gas and New Energy industries.

The energy and climate bill is keeping a lot of lobbyists in work. (click to enlarge)

COMMENTARY
It is a titanic clash of lobbyists, the coal industry (which provides 46% of U.S. electricity) versus the natural gas industry (which provides 20.5% of U.S. electricity).

Those industries’ lobbyists will be battling for the enormous money at stake in the energy and climate bill working its way through Congress and expected to become law by December. H.R. 2454, the American Clean Energy and Security Act of 2009 (ACES), written by Representative Henry Waxman (D-CA), Chair of the Energy and Commerce Committee, and Representative Ed Markey (D-MA), Chair of the Energy Subcommittee, was passed by the House of Representatives in June. It is the template for Senate legislation now being written by Senator Barbara Boxer (D-CA), Chair of the Environment and Public Works Committee, and Senator John Kerry (D-MA), Chair of the Foreign Relations Committee.

In the mandatory cap&trade system the final legislation is expected to contain, H.R. 2454 provides natural gas with emissions allowances worth $30 billion over 10 years. But it provides coal companies and coal-burning utilities with many tens of billions more than that in free allowances plus $10 billion for research, development and demonstration (R,D&D) of “clean” coal technology.

The coal industry has been buying politicians in anticipation of this fight. (click to enlarge)

If something like H.R. 2454 – including (1) a first-ever mandatory U.S. cap&trade system, (2) a first-ever mandatory national Renewable Electricity Standard requiring U.S. utilities to obtain 15% of their power from New Energy sources by 2020 and (3) extensive funding for New Energy and Energy Efficiency – passes, electricity generation from natural gas will increase less than 1% from 2015 to 2030 and generation from coal will remain unchanged. Without a bill, natural gas use will grow 30% from 2015 to 2025 to coal’s 7% (EPA numbers).

The American Coalition for Clean Coal Energy (ACCCE) is the central coal industry lobbyist. As documented in superb work done by Marianne Lavelle of the Center for Public Integrity (see MORE ON THE “CLEAN” COAL LOBBY’S ASSAULT…), ACCCE is prepared to outspend all competition and do whatever it takes to win support for coal. It and associated groups have already been caught in numerous lies and misrepresentations. (See COAL CAUGHT LYING AGAIN)

Coal's lobby wants you to believe these are the faces of everyday people who love coal but...(click to enlarge)
These are bought-and-paid-for models. (click to enlarge)

The natural gas industry is represented by the American Natural Gas Alliance (ANGA). Late to the effort, ANGA is now unequivocal about its intention to spend and do in Herculean measure. (See LOBBYISTS PUSHING HARD…)

Memos obtained by investigative reporters make it clear that ACCCE’s strategy is to sell “clean” coal, not because it believes the technology to capture and sequester coal’s spew is available but because it is something that will sell.

ANGA appears to be ready to bear the burden of truth and bring the fact of natural gas being the “cleanest” source of fossil fuel power generation – and truly ready to go to work – to the debate.

This will be the greatest test to date of the coal industry’s power. ACCCE has nothing going for it but a seductive lie.

Natural gas is a much better choice than any other fossil fuel. (click to enlarge)

Natural gas is weakened in the debate because its normal ally, Big Oil, opposes the legislation. Exxon Mobil CEO Rex Tillerson and other oil company CEOs have been vocal in their advocacy of a carbon tax they surely know is a political impossibility because they also surely know it is a means of defeating cap&trade and protecting their companies from paying a price for the greenhouse gas emissions (GhGs) for which they are responsible. Because natural gas is more an electricity source more than a vehicle fuel, it cannot afford to resist the inevitability of the energy and climate legislation.

Natural gas is also weakened in the debate because H.R. 2454’s incentives to “clean” coal and New Energy leave relatively little in funding for it.

It’s weakened position could conceivably tempt the natural gas industry to join Big Oil and fight the bill.

Natural gas is not without environmental problems. (click to enlarge)

But leaders in the New Energy community have recently been talking up natural gas. Climate change hero and former Vice President Al Gore, former President Bill Clinton and Senator Harry Reid (D-NV), the Senate's Majority Leader, all recently endorsed T. Boone Pickens’ $60 million campaign on behalf of wind energy and the use of compressed natural gas to drive the U.S. bus, truck and heavy transport fleet. Environmental hero Robert F. Kennedy, Jr., recently endorsed natural gas as a bridge to the New Energy economy. Could this be the beginning of a beautiful friendship?

Some environmentalists have submitted to “clean” coal. It is more than tempting, it is seductive. If “clean” coal were to become a reality, it would make a huge difference to the fates of coal-dependent emerging economies like China and India. And it would be an economic boon of inconceivable proportion to whatever country proves the technology.

David Hawkins of the Natural Resources Defense Council says a “clean” coal plant is a cleaner plant than a natural gas plant without such technology.

Yes, BUT.

There are serious questions about the widely heralded new "abundance" of natural gas. (click to enlarge)

IF such technology becomes available – because right now it is not – it will be cheaper and easier to implement with natural gas. IF it proves to be too expensive to capture a plant’s emissions and too risky to sequester them, both of which are the most likely eventualities in “clean” coal’s fate, natural gas is a route to an immediate and significant reduction of emissions through the production of lower-emissions electricity and the use of compressed natural gas as a heavy transport fuel.

And natural gas is, of all the Old Energies, the most ideal partner for the New Energies in power generation. Shifitng to natural gas allows for the development of emissions capture and sequestration technology and for its failure. It would cut emissions immediately and facilitate the growth of emissions-free New Energy.

Natural gas works better than any other Old Energy with the New Energies. Combined gas/solar power plants are in the works and wind is already being integrated with gas plants. (click to enlarge)

Given all the IFs, there is no justification for not building into the energy and climate legislation incentives to build natural gas plants - but only in place of new coal plants, not in place of funding New Energy.

Another advantage to a New Energy/natural gas alliance is that it would steer the conversation and the future away from coal and the seductive illusion of “clean” coal.

Providing funds for the research, development and demonstration (R,D&D) of “clean” coal is perfectly justifiable. Spending to allow the biggest mistake in U.S. industrial history since the Edsel to prove itself so is a terrific investment.

click to enlarge

QUOTES
- Senator Charles E. Schumer (D-NY): “The Senate is more open to natural gas as a transition fuel than the House was…but the senators from the coal states who are crucial votes are going to want first consideration for coal.”
- Aubrey McClendon, chief executive, natural gas producer Chesapeake Energy: “Never in my life have I been confronted with something so obviously easy and good to do [as converting the U.S. bus, truck and heavy transport fleet to compressed natural gas] and have such Congressional apathy…”
- Vic Svec, senior vice president, coal company Peabody Energy: “Coal with carbon capture and storage is the low cost, low carbon solution and has fantastic implications for the nation’s energy security…”
- David Hawkins, climate change expert, Natural Resources Defense Council: “A coal plant with carbon capture and storage is a cleaner plant than an uncontrolled natural gas plant…”
- William F. Whitsitt, executive vice president, gas producer Devon Energy: “By allowing free emission allowances to maintain coal production from existing coal plants, while providing mandates that there be more wind and solar, you squeeze gas out in the middle…”
- Rodney Lowman, president, ANGA: “The politics of natural gas are going to change dramatically…”